House price growth reaches its highest level since 2014

Home price growth in the United States has pushed in the penultimate month of 2020 to levels not seen in nearly seven years.

Standard & Poor’s said on Tuesday that its national S&P CoreLogic Case-Shiller house price index registered an annual gain of 9.5% in November, up from 8.4% in October. The index last reached this level in February 2014. The 20-City Composite Index posted an annual gain of 9.1%, up from 8% in the previous month. The national and 20-City estimates beat the estimates by 8.85% and 8.7%, respectively, according to the Bloomberg consensus.

“The accelerating house price trend that began in June 2020 has now reached its sixth month with the emphatic November report,” said Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices, in a press release. “As COVID-related restrictions began to take hold of the economy last spring, their effect on house prices was unclear. Price growth slowed in May and June before starting to rise steadily. The November report continues this acceleration in a particularly impressive fashion.

Phoenix led the 20-City Composite for the 18th consecutive month, posting an annual gain of 13.8%, while Seattle and San Diego followed, registering a gain of 12.7% and 12.3% respectively of a year to year.

“The strength of the housing market was once again pervasive: all 19 cities for which we have November data increased, and all 19 grew more in the 12 months ended November than they had gained. during the 12 months ended in October, ”said Lazzara.

“ A real secular change in the demand for housing ”

Home prices continued to be fueled by historically low interest rates, historically low inventories and increased activity due to pent-up demand from COVID-19 lockdowns and a migration to the outskirts of urban areas .

“The recent data is consistent with the idea that COVID has encouraged potential buyers to switch from city apartments to suburban homes,” Lazzara said. “This may represent a real secular shift in housing demand, or may simply represent an acceleration of movements that would have taken place over the next few years anyway. Future data will be needed to answer this question. “

The story continues

“The housing market has continued to remain stronger than expected throughout the final months of 2020 and despite rising infection rates across the country. With mortgage rates falling steadily through the end of the year and buyers realizing that the pandemic is still far from over, strong demand has not been disrupted by the traditional seasonal downturn, ”he said. Selma Hepp, deputy chief economist at CoreLogic, said in a press release ahead of The results. “And since we don’t know when social interactions will be safe again, buyers will continue to fight for fewer and fewer homes available for sale, which will drive up house prices.”

Total inventory at the end of December was 1.07 million units, down 16.4% from the previous month and 23% from a year ago, according to the NAR. Unsold inventory is now at a record 1.9 months of supply at the current pace of sales, down from 2.3 months in November.

While housing starts and building permits in December showed that construction of new single-family homes is proceeding at the fastest pace since 2006, the rise is unlikely to continue to keep pace with demand or offset supply. already depressed.

Experts expect house prices to end the year on a high note and rise through 2021. According to the National Association of Realtors, the median price of existing homes in December was $ 309,800, up 12.9% from December 2019, with prices increasing in all regions. December’s domestic price hike marks 106 consecutive months of year-over-year gains. And that’s the highest level ever for a December, according to NAR.

Amanda Fung is a writer at Yahoo Finance.

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